## Features of calculating the cost of production in integrated production

The main feature of co-produced products is the impossibility of identifying it before reaching a certain point in the production process, which is called the point of separation. In this case, the separation of raw materials into individual products can be carried out simultaneously or at different periods.

Up to the point of separation, there are common costs, consisting of the cost of processed raw materials and the costs of processing it. After the separation point, the products obtained can be considered finished products (for example, meat on bones) or be further processed (by-products, raw fat, intestinal raw materials, raw skins). In the latter case, the costs of subsequent processing are attributed to certain types of basic and by-products.

When developing the main and by-products, it becomes necessary to distribute the total costs between the individual types of products. For this purpose, different methods of proportional distribution of costs are used. These methods can be divided into two types:

1) based on natural indicators;

2) based on cost indicators.

The easiest way to distribute total costs in proportion to the volume of production of the various products is in the * group of ways to allocate total costs based on natural indicators *.

With this method, the total costs (60,000 rubles) are divided by the total number of products produced (1,000 kg and the product cost per product type (60 rubles) multiplied by the number of products (Table 5.1).

* Table 5.1 *

** Cost sharing is proportional to production volume **

View products |
Quantity, kg |
Total costs, rubles. |
Unit cost of production, rubles. |

A |
500 |
30 000 |
60 |

B |
300 |
18 000 |
60 |

In |
200 |
12 000 |
60 |

Total |
1000 |
60 000 |
60 |

The use of this method is based on the assumption that all products produced have the same prime cost and sales price. If the selling prices of certain types of products are different, this can lead to different profitability, and sometimes loss-making of certain types of co-products.

In addition, this method of allocating the total costs can only be applied in the production of products measured in the same units. For products that are solids, liquids, gases, etc., it is quite difficult to find a common basis for measuring their quantity. These features limit the ability to apply this method of allocating total costs.

Coefficient method of distribution of total costs is used in integrated production, where several types of primary products are produced from raw materials.

For the distribution of total costs between products, the following procedures are performed:

- each type of product is assigned a conversion factor in the reduced unit;

- the quantity of each product is multiplied by the set conversion factors;

- determine the total number of units listed (by summing their number for each type of product);

- the total costs are divided by the total number of units listed and the cost of one reduced unit is calculated,

- the prime cost of the reduced unit is multiplied by the number of units given for each type of product (Table 5.2).

In this table, the total costs (40,000 rubles) are divided by the total number of units given (800); The prime cost of the reduced unit (50,000 rubles) is multiplied by the number of units for each type of product (610, 180, 10).

* Table 52 *

** Coefficient allocation of total costs **

The bird |
Quantity in kind, t |
Coefficient Allocations |
Number of units listed, pcs. |
Total costs, thousand rubles. |
Unit cost of production, thousand rubles. |

1 |
2 |
3 |
4 |
5 |
6 |

I category |
610 |
1.0 |
610 |
30 500 |
50 |

Category II |
300 |
0.6 |
180 |
9000 |
30 |

Lean |
20 |
0.5 |
10 |
500 |
25 |

Total |
930 |
X |
800 |
40 000 |
X |

The conversion factors for individual types of products are established taking into account the specifics of their production, the rates of output of individual products from a unit of raw materials, aggregate consumer properties, the ratio of processing costs, sales prices, physico-chemical properties of the products obtained and other characteristics.

* The method for allocating total costs based on cost indicators. * With

*the total costs are distributed between the types of output produced in proportion to their value at the selling price (Table 5.3).*

**the way in which the total costs are distributed in proportion to the value of products at sales prices** * Table 5.3 *

** The distribution of total costs in proportion to the cost of production **

View products |
Cost of products at sale prices, rubles. |
Specific weight in total sales, |
General costs, rubles |

A |
50 000 |
50 |
30 000 |

B |
30 000 |
30 |
18 000 |

In |
20 000 |
20 |
12 000 |

Total |
100 000 |
100 |
60 000 |

According to the given table, the total costs (60,000 rubles) are distributed among the products "A", "B" and B in proportion to their value at selling prices (50,000 rubles, 30,000 rubles and 20,000 rubles). The profit on the specified kinds of production will make accordingly 20 000 rbl. (50 000 - 30 000), 12 000 rubles. (30,000 - 18,000) and 8,000 rubles. (20 000 - 12 000), and the profitability in relation to the cost of production at sales prices is 40% (20 000 rubles: 50 000 rubles x 100%, 12 000 rubles: 30 000 rubles x 100%; 8000 rubles: 20,000 rubles x 100%).

* The method of distribution of total costs in proportion to the cost of semi-finished products at the point of separation * is used in cases where the semi-finished products obtained at the separation point are subjected to additional processing. To distribute the total costs between the types of products produced, the following calculations are performed for this method (Table 5.4):

- determine the cost of each type of final products at sales prices (column 2);

- for each product type, the subsequent (after the separation point) costs for processing them (column 3);

- Subtracting the subsequent costs of processing from the cost of production at the sale price, determine the cost of each kind of semi-finished products (column 4);

- determine the specific weight of each kind of semi-finished products (column 5);

- distribute the total expenditure by types of semi-finished products in proportion to their specific gravity in the total population (column 6).

* Table 5.4 *

** Distribution of total costs in proportion to the cost of semi-finished products **

Product type |
Cost of products at sale prices, rubles. |
Subsequent costs, rub. |
Cost, semi-finished products, rubles. |
Specific weight of semi-finished products,% |
Total costs, rubles. |
Profit, rub. |
Return on sales, |

1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |

A |
50 000 |
9000 |
41 000 |
51 |
30 600 |
10,400 |
20.8 |

B |
30 000 |
6000 |
24 000 |
30 |
18 000 |
6000 |
20.0 |

In |
20 000 |
5000 |
15 000 |
19 |
11,400 |
3600 |
18.0 |

Total |
100 000 |
20 000 |
80 000 |
100 |
60 000 |
20 000 |
20.0 |

Using this method of allocating total costs, the profitability of the jointly produced products can be different. To ensure the same profitability of products obtained in a single process, use the method of allocating total costs based on a constant share of profit in the volume of sales. With this method, the following calculations are carried out for the distribution of total costs:

1) determine the value of each type of product at sales prices;

2) calculate the amount of profit for each type of product based on the same level of profitability established for all products;

3) Subtracting from the cost of products at the sale price of the amounts of profit determines the cost of each type of product;

4) by subtraction from the cost parameters of the subsequent costs, the total expenditures by types of products are calculated (Table 5.5).

* Table 5.5 *

** The distribution of total costs based on a constant share of profits in the sales volume **

Metrics |
Product type |
Total |
||

A |
B |
In |
||

1. Cost of products at sale prices, rubles. |
50 000 |
30 000 |
20 000 |
100 000 |

2. The amount of profit (at 20% profitability), rubles. |
10 000 |
6000 |
4000 |
20 000 |

3. Cost of production, rubles. |
40 000 |
24 000 |
16 000 |
80 000 |

4. Subsequent costs, rubles. |
9000 |
6000 |
5000 |
20 000 |

5. Total costs (item 3-4), rubles |
31 000 |
18 000 |
11 000 |
60 000 |

After the allocation of total costs between the main and by-products, the prime cost of the main product is determined by the summation of subsequent and total costs. The unit cost is determined by dividing the total costs by the number of units of output. In the same way determine the cost price of certain types of by-products.

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